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Sunday, July 29, 2012

Poverty And Why We Can’t End It

Poverty in America continues, and while it has been higher – 15 percent in 1983 – it now stands at 11.3 percent, the second lowest rate on record and only a fraction over the very lowest since records have been kept (11.1 percent in 1973). So it isn’t that poverty has increased as a percentage of the population; the number of people in poverty has increased because of population growth.

While the total number is important, it is the percentage rate that really tells the story. First, the fact that the proportion of people in poverty today is near its lowest in 40 years means that both Democrats and Republicans share the responsibility. Both Clinton and George W. Bush presided over America during years when the poverty rate was higher than it is now.

Second, even though the country has radically changed since 1973 – greater number of immigrants, more participation of women in the labor force, fewer manufacturing but more high-tech and especially service jobs, etc. – the poverty rate has not.

Third, and perhaps most importantly, given the media attention attached to it, the poverty rate has remained relatively low despite the increasing income and wealth disparity in the country. Despite the brouhaha, the concentration of wealth is not contributing any more to poverty than it has – if it has – in the past.

Peter Edelman tries to analyze these and other factors in the New York Times (7.6.12). Unfortunately he stresses the importance of those government programs – Medicaid, Social Security, and Food Stamps – which keep people from falling into more extreme poverty than he does suggesting how to generate wealth and income among the poorest Americans. He suggests a number of reasons why poverty persists; but rather than address the structural issues which underlie them, he makes implicit assumptions about government failure. In his view, it is the responsibility of government to raise people out of poverty just as it has prevented their further fall:

Why have we not achieved more? Four reasons: An astonishing number of people work at low-wage jobs. Plus, many more households are headed now by a single parent, making it difficult for them to earn a living income from the jobs that are typically available. The near disappearance of cash assistance for low-income mothers and children — i.e., welfare — in much of the country plays a contributing role, too. And persistent issues of race and gender mean higher poverty among minorities and families headed by single mothers.

The question is why do people work at low-wage jobs and what can be done to raise family income? First of all up until 2010 the number of illegal aliens in the country has been approximately 11 million. While this is approximately only 3 percent of the total US population, illegal immigrants make up 5 percent of the workforce (NPR, 3.7.06 report). These illegal immigrants have been willing to work for the minimum wage or below, thus forcing down overall wages in certain industries. Recently legal immigrants, many with little or no English and education are unlikely to demand higher wages and benefits. Until these illegal and legal immigrants return home (this is already happening for Mexican immigrants), their wages will remain low.

Second, while there are are higher-level jobs available, especially in the high-tech industries, rapidly increasing as a proportion of GDP, employers find few qualified American applicants. Major corporations like Apple, Microsoft, and Intel have gone on record lamenting the skilled labor shortage in American.

The public education system is broken, few children graduate at or above grade level, and few have been given the risk-taking and entrepreneurial skills demanded by competitive business. A large proportion of the black population still lives either in poor, dysfunctional neighborhoods or in more abject poverty in the South. Unless these systemic problems are more directly confronted by community leaders, rejecting the corrosive tradition of entitlement and focusing on achieving majority American norms, residents of these neighborhoods will remain unemployed or employed in low-wage jobs.

Charles Murray has recently written a book (Coming Apart) which chronicles the plight of the white rural underclass and suggests that it suffers from the same dysfunction as the urban black, especially the breakdown in family structure and consequent loss of majority norm values.

Edelman cites “persistent issues of race and gender” as contributing factors to poverty, and once again suggests that it is government’s job to address them. Gender is a non-issue in 2012. While the glass ceiling no doubt exists in certain professions, the recent appointment of a young woman as CEO of Yahoo is but one example of talent trumping sex. The proportion of women in law school, medical school and other educational institutions is in many instances higher than men.

Race is an issue, of course, and while landmark Supreme Court decisions have guaranteed de jure equality and desegregation, reality if far from those ideals. Crossing the Anacostia River in DC is like entering a Third World African country. All DC wards across the river are over 90 percent black, predominantly poor, with social indicators far below the norm.

Fifty years of social programs have made very little dent in minority poverty, employment, incarceration, and health rates. While there is no doubt that if America could solve the problem of the inner cities, it would have done it by now. Edelman gives no answers because he cannot; and he, like the rest of us, have spent the last five decades stumbling over this conundrum.

Only one factor related to poverty mentioned by Edelman – more restrictive social programs – is clearly and directly in the hands of government; and yet there are strong reasons for their limitation. Welfare programs, beginning with Bill Clinton, have become less permanent features of poor communities than the temporary investments envisaged when they were created. A de facto permanent dole discourages social mobility, job searches, and income prospects.

Welfare today is becoming more efficient, but is still far from the type of intervention that can enable people to rise out of poverty that it was originally thought to be. Social Security is part of a safety net with wider spaces in it, but it is the more productive model of better education – greater adherence to majority norms - better jobs - higher wages - more savings that should be considered before expanding government welfare.

Edelman concludes with a litany of progressive solutions:

We know what we need to do — make the rich pay their fair share of running the country, raise the minimum wage, provide health care and a decent safety net, and the like. But realistically, the immediate challenge is keeping what we have. Representative Paul Ryan and his ideological peers would slash everything from Social Security to Medicare and on through the list, and would hand out more tax breaks to the people at the top. Robin Hood would turn over in his grave.

While reforming health care is necessary and should be a priority, the other items on his list are not. ‘Fair share’ is not easy to define when the economic contributions of the wealthy are considered. Raising the minimum wage, according to many business owners will depress job creation. The definition of ‘a decent safety net’ is also unclear, given my observations above; and the ‘slashing’ of Medicare and Social Security, i.e. reassessing both payments and benefits for rich and poor – is absolutely necessary in a society which has shunned taxes.

Poverty is a structural issue, not one that can be solved by government programs.

1 comment:

More than 45 million people, or 14.5 percent of all Americans, lived below the poverty line last year, the Census Bureau reported on Tuesday. The percentage of Americans in poverty fell from 15 percent in 2012, the biggest such decline since the year 2000.Sep 16, 2014Guess it depends on how one reads the data.